WellPoint profit declines as revenue rises
Health insurance giant WellPoint Inc.’s profit dropped 7.6% in the third quarter compared with a year earlier even though enrollments and revenue rose.
The nation’s largest insurer by membership and parent of Anthem Blue Cross of California earned $683.2 million in the three months ended Sept. 30, down from $739.1 million during the same period last year.
Executives at the Indianapolis company said profit was down partly because of lower investment income and higher expenses from the purchase of CareMore Health Group, a Cerritos healthcare provider that serves seniors. The company also said last year’s performance was aided by the release then of $110 million in reserves for operating expenses.
Despite a smaller profit, earnings per share rose 3% to $1.90 from $1.84 primarily because the company bought back 13.4 million shares of its stock.
“Our ability to add new customers while controlling costs demonstrates our execution and emphasis on creating a more affordable operating model for our customers,” Chief Executive Angela F. Braly said in a statement.
WellPoint, which operates Blue Cross Blue Shield plans in 14 states, said enrollment in the third quarter grew 2.6% to 34.4 million from 33.5 million during the same period last year. The company has added more than 1 million members since the beginning of the year.
Enrollment in its senior business grew most proportionately in the third quarter, up 14.8% to 1.44 million policyholders from 1.26 million last year, aided by the company’s acquisition of CareMore.
Third-quarter revenue rose 5.7% to $15.4 billion from $14.6 billion.
WellPoint raised its 2011 earnings forecast, saying it will be $6.90 to $7 a share, not counting investment gains. Its previous guidance was $6.75 to $6.95 a share.
WellPoint shares were up $2.58 to $69.58 at the close of trading Wednesday.
